Here we are again, wrapping up another year.  You might have seen the Seattle Times article last week that heralded a 10% gain over 2010’s pace for the Northwest Multiple Listing Service.  Not bad, given the continued pressure from short sales, foreclosures and tight lending practices.  But, that’s still barely half the peak, pre-bust volume—at a time when interest rates have never been lower.  Heck, 30-year fixed rates have been below 4% for nine straight weeks!  Also, we like the prediction from Money Magazine that put Seattle and Tacoma among the 12 best places to buy because they will likely experience the strongest sales gains through 2012. Yahoo! That’s usually a great sign for market conditions here in Skagit Valley.

2011 Was A Year Of Stabilization in our marketplace.  We continued to see some growth in terms of total property sales (Single Family Homes, Condos and Vacant Land), which totaled 392 units versus 366 the year before.  The same was true for single family residences, which capped out at 303 for the year versus 291 in 2010 and 250 for 2009.  So, we have seen a 21% increase during the last two-year period. Also significant is the fact that listings in place at the end of the year dropped 10% from the prior year and 20% from (end-of-year) 2009.   A recent industry report talked about this “dichotomy” as a gap that is rare in real estate history.  Essentially, it points out that over 50% of consumers now feel that it is an ideal time to purchase a home, while 90% of homeowners feel it is not the ideal time to sell.  Our sense is that there will be a meeting of the minds between these diverging sentiments very soon.

Average Sales Prices dropped approximately 6% from the previous (2010) year.  However, we note that last year’s averages actually increased by nearly 5% from the prior year.  You’ll recall that last year’s “Stimulus Plan” from the government did fuel and alter the dynamics of the marketplace in general.  Also, 2010 saw an upswing in sales over $750K (21 Properties) which drove averages up.  So, our assessment is that the local market pretty much held its course in 2011, while many other locales took another severe downturn. 

Presented is a six-year chart of closing by price which depicts a heavy emphasis on sales below $500k since the start of the real estate recession. As we have pointed out for some time, average prices are a function of both the mix of product sold and the actual prices asked and paid. Clearly the recovery of sales for homes below $500,000 have outpaced higher price residences.  But, this phenomenon is common to all markets and therefore presents a domino affect since buyers in a given price range often have a home of similar value to sell before a transaction can take place. 

We are extremely hopeful that in 2012 we will begin to see the return of buyers in all price ranges.  There are certainly great buys ready to be loved!  

Presented is a six-year chart of closing by price which depicts a heavy emphasis on sales below $500k since the start of the real estate recession. As we have pointed out for some time, average prices are a function of both the mix of product sold and the actual prices asked and paid. Clearly the recovery of sales for homes below $500,000 have outpaced higher price residences.  But, this phenomenon is common to all markets and therefore presents a domino affect since buyers in a given price range often have a home of similar value to sell before a transaction can take place. 

We are extremely hopeful that in 2012 we will begin to see the return of buyers in all price ranges.  There are certainly great buys ready to be loved!  

The John L. Scott Team  proved itself again this year by wrapping up its second consecutive year as the leading brokerage office in Anacortes as measured in Gross Dollar Volume.  In fact, because our team is engaged in serving folks in every corner of Skagit County, we are pleased to report that, in 2011 our team produced more volume than any office in the county—at just over $70 million in real estate sales.  The chart below represents only the dollar volume of our residential sales transactions  (Single Family and Condo) in the Anacortes market, as compared to equivalent transactions for other offices in our vicinity. We wish to thank all the buyers and sellers, mortgage representatives, inspectors and title specialists who made these numbers possible!.  We certainly could not have done it without you!

Ask your JLS representative  for a copy of our new refresher on “Why Tax Valuations Should Never Be Confused  With Market Values”.  Essentially, what this piece attempts to do is discuss the ways in which these two valuation methods are different and therefore why they should never be relied upon for the same kinds of property analysis.  We believe this is a “must read” for both buyers and sellers of real estate properties.

In this version of Market Soundings, covering real estate sales and conditions in the Anacortes/Fidalgo Island, Guemes Island and LaConner marketplace, we attempt to summarize the past period’s market activity and offer our perspective on the results. It is our hope that the information and perspectives provided will help our clients and friends make more enlightened and market-relevant real estate decisions.

The “Bubble” is gone.  This chart, while somewhat difficult to read tells the story of US real estate since 1970.  More specifically, it illustrates the fact that the bubble real estate values that began in 1999 and peaked in 2006 have essentially been eliminated.  The red line represents real estate prices over time, adjusted for inflation. The blue line estimates the value of today’s “average home” over the same time period, which basically adjusts for factors such as trends towards larger or smaller homes.  The solid black line plots the growth in values established prior to 1999 and extends that trend line to today’s valuations.  What this demonstrates is that the market has corrected back to historical valuation trends.  Interestingly, the same correlation can be demonstrated when you overlay historical increased in rents with real estate values.  Simply put, it proves out that values return to mimic  the same trend lines established in rental rates.

Soft, but strengthening market. Anecdotally, our local market seems to have solidified during the past quarter.  We have seen definite movement in some of the mid and higher range price categories and well-priced homes are receiving consistent showing activity.  However, market corrections take time and Q2 results were less than rosy.  Total MLS transactions were down 10.3% versus the previous year and total dollar volume produced was off by 21.6%. This continues to reflect the presence of short sales and foreclosures along with higher volumes in the lower price categories.  On a YTD basis, unit sales are down only slightly due to the wholesale purchase of finished lots by a local builder in March of this year.

Single-family home sales outpace Q1 results.  While not quite measuring up to 2010 activity that was partially fueled by the government stimulus program, single-family home sales did jump 34% over the previous quarter—from 61 to 82 homes.   This quarter also saw a rise in the average price of homes—to $320,000.  During Q1 the average sold price had dropped to $308,000. Now it appears sold values are on the rise, although they did not reach 2010 average price points for the quarter. 

On a year-to-date basis, the distribution of single-family sales pretty much parallels what occurred in 2010, with the exception of closings for homes above $750,000 which were much weaker.   We did end June with a total of 7 properties pending with listing prices above $500,000.  Also, there are a variety of higher priced properties that are contingent, awaiting sale of the buyer’s home.

Another interesting factoid is that the year-over-year inventory (listings) of homes for sale has declined by 13%.  This is welcome news for sellers because the market had been become extremely crowded with inventory, especially in some price categories.

JLS Leads in Dollar Volume.  During Q2 our team produced transactions involving $18.9 million in real estate sales.  This not only outpaced all other Anacortes-based brokerage firms (see chart), but topped all offices throughout Skagit County.  And, JLS Anacortes was the only firm among the county’s top five brokerages to post an increase unit sales over the previous year.  Our goal is to continue this strong record into an improving real estate marketplace.

Thanks to our residents.  As a final thought for this summary, we would like to thank the many local buyers that have decided to re-invest in the Anacortes and Skagit Valley experience.  As a practice, we monitor the origin of property  buyers.  Recently, the preponderance have been  people indigenous to the area.  People who  know and love our lifestyle and understand the true value of living here..  Thanks for leading in these uncertain times.

In this version of Market Soundings, covering real estate sales and conditions in the Anacortes/Fidalgo Island, Guemes Island and LaConner marketplace, we attempt to summarize the past quarter’s market activity and offer our perspective on the results. It is our hope that the information and perspectives provided will help our clients and friends make more enlightened

It’s amazing how many folks are waiting for tell-tale signs that the real estate market is  blossoming again.  There are tons of other strong indications that the economy is making strides again, but real estate has been the reluctant participant—a fact that has frustrated sellers, brokers and even buyers.  A recent headline from the Seattle Times business section shouted “More spring in home sales; too soon to say it’s a trend”.  Hmmm! Isn’t anyone willing to stick their neck out any more?  Are we going to wait for the historians to write about the opportunities missed during a turnaround that most certainly is going to happen?

Well, the truth is, there are some encouraging signs.  First, our market showed some definite resiliency by posting a total of 60 single family closed sales during Q1.  This mirrored last year’s transaction count, but last year we were in the throes of a government stimulus plan geared to spark the market.  Now those stimulus credits are gone.  Also, March concluded with 39 pending single family home sales in the pipeline.  This was an 18.2% increase over the previous year and a 62% improvement over March 2009.

From an inventory standpoint, we ended Q1 with 294 unsold single-family listings in the marketplace, down 18.5% from the year before and 16% from March inventory in 2009.  Some of this inventory reduction is due to sellers removing their listings from the market, but we have also sold through a significant number of homes in certain price ranges. And, land sales have typically been the last segment to respond to an improving market.

During the quarter we did see a decline in condominium sales and the continued, very sluggish track record for vacant land transactions.   However, we did sell through a significant amount of the moderate priced condominium inventory during 2010.   And, land sales have typically been the last segment to respond to an improving market.

In this version of Market Soundings, covering real estate sales and conditions in the Anacortes/Fidalgo Island, Guemes Island and LaConner marketplace, we attempt to summarize the past year’s market activity and offer our perspective on the results. It is our hope that the information and perspectives provided will help our clients and friends make more enlightened and market-relevant real estate decisions.

Get Out Your Crystal Balls!

Happy New Year to everyone and especially those who have survived the perils of the 2010 residential real estate market.  It was a thrilling year full of continued pressure from so many different  fronts.  In preparation for this writing I did quite a bit of research on the latest forecasts predicting everything from more doom and gloom to a sharp recovery in 2011.  Wow, what a bunch of contradictory prognostications!  What all this tells us is that nobody has a real handle on the type and timing of recovery we can expect.  Clearly, some markets can expect further price pressure due mostly to the sluggish job market and over-hang of foreclosures and short sales.  But, some markets are also predicting a turn in the market—perhaps as early as the second quarter of this year.  Seattle, which has a big influence on conditions in our marketplace, is widely expected to be on the leading edge of real estate market improvements.

The big question we are always asked is “When will prices bottom out?”.  Of course the “flip” answer to this muse is that by the time we really know that prices have bottomed out it will be too late to take advantage of it.  Our sense, however, is that prices in some segments of the market  have already begun to firm up.  This condition, along with extremely low interest rates drove a surge in buyer activity toward the end of 2010, which we anticipate will continue.  

Average Sales Prices Rose in 2010.  After a three year slide from the 2006 high our market posted a modest, 5% improvement in the average closed sales price for single-family homes.  In fact,  during the last six months of the year, the average jumped to $386,190. This rise was primarily due to rebounds in the sale of higher and mid-priced homes in the area. Which was a welcome event.

Total Closings Also Grew By 14%.  Another positive sign for the market was continued improvement in the residential transaction base, which hit a low in 2008. We saw strength in single family homes, which surged 16.8% versus 2009, and continued development in moderate priced condominiums.  We did not see improvement in vacant land sales, however these properties are historically late-comers to an improving market. But most importantly was the fact that we are beginning to obtain a much better distribution of closings across a broader spectrum of price categories.  While government stimulus programs continued to fuel more affordable, entry level home purchasing, we also experienced a 30% increase in sales for homes priced from $500,00 to $750,000 and nearly doubled closed sales of homes above $750,000.  While still shy of robust figures in 2006 though 2007, it is good to see this positive trend emerging.

John L. Scott Leads The Market!  To quote that old saying “when the going gets tough, the tough get going”, we would be remiss in not pointing out that our great team of John L. Scott professionals were involved in more closed transactions in the Anacortes-Guemes Island-LaConner marketplace than any other brokerage firm.  In fact, our team successfully closed real estate transactions throughout Skagit County involving 65.9 million dollars.  That’s more than any other singe office located in our county.  Thanks to all of the buyers and sellers for making this happen.  And, for all the future clients that will make 2011 even more spectacular!